Exclusive: Bank of Scotland to cut rate on top-paying current account

The Bank of Scotland is cutting the headline interest rate on its current account 'Vantage' add-on from 3% to 2% in June, MoneySavingExpert.com can reveal - meaning you'll no longer be able to save £15,000 at 3% interest.

Currently customers who add the Vantage feature to their accounts benefit from a tiered interest rate system on credit balances, getting 1.5% AER on balances of £1 to £999.99, 2% AER on £1,000 to £2,999.99 and 3% AER entire balances between £3,000 and £5,000.

If you add the feature to a Classic Account it's actually possible to save £15,000 at 3% via a trick we've featured in the weekly email - crucially, Bank of Scotland allows customers to open THREE accounts, so if you open all three you can boost your returns.

However that's being scrapped in favour of a flat rate of 2% on all balances between £1 and £5,000. The move means those with smaller savings will earn more interest, but bigger savers will see their earnings cut.

The changes will apply to both new and existing Vantage customers from 11 June, and the bank is now writing to affected customers to warn them.

Classic Account customers are able to add the Vantage feature and benefit from interest on credit balances as long as they pay in £1,000/mth, stay in credit, and have two different direct debits paid from each account each month.

The feature can also be added to the paid-for Platinum account, as well as number of legacy accounts no longer open to new applicants.

I'm a Vantage customer - how does this affect me?

The table below shows how your interest earnings will change after the new rate comes in.

Bank of Scotland Classic Account with Vantage annual interest

Interest (AER)/rewards

Amount in account

£500

£1,500

£3,000

£5,000

£15,000 (with 3 accounts)

Now

3% if you've £3k-£5k, 2% if £1k-£2,999, 1.5% under 1k

£7.50

£30

£90

£148

£444

From June 2017

2% on up to £5k (entire balance)

£10

£30

£60

£99

£297

How will the Bank of Scotland account compare after the rate cut?

Once the rate cut comes into force, the Bank of Scotland account will pay the same interest as the Club Lloyds account, which also offers 2% on balances up to £5,000. Club Lloyds has a higher minimum pay-in though - £1,500/mth, and a charge of £3/mth if you miss it - and doesn't allow you to open three accounts.

For bigger savings, the Santander 123 account pays 1.5% on up to £20,000, which for many could still be a winner. There's a £5/mth fee, but for many the cashback on bills it offers will offset this.

For those with smaller savings, the highest payer for balances of up to £2,500 is Nationwide Flexdirect at 5% - but this rate is only for a year. Next in line is TSB Classic Plus, which pays 3% on balances up to £1,500. As of today Classic Plus now also offers up to £10/mth cashback (£5/mth for 20 debit card transactions, and another £5/mth for two direct debits).

We're still waiting to see if Tesco Bank will reopen applications for its popular current account which pays 3% interest on up to £3,000 - this rate was guaranteed until April 2019 and you could open two of them. Last month Tesco Bank suspended applications for this account after receiving 60,000 in four days.

What does the Bank of Scotland say?

In a statement the Bank of Scotland said: "These changes follow a review of our current accounts, taking into consideration changing market conditions. We believe these changes ensure that Vantage remains both attractive to customers and competitive in the market.”

Additional reporting by Karl Talbot

Get Our Free Money Tips Email!

For all the latest deals, guides and loopholes - join the 12m who get it. Don't miss out

Have your say

This is an open discussion; anyone can post. Comments may be edited, and are only published during the working day. Please report any spam, illegal, offensive, racist, libellous posts (inc username) to fbteam@moneysavingexpert.com.

American Express cardholders will now have to wait TWO YEARS after cancelling a card in order to qualify for another welcome bonus – making it much more difficult for those who cycled between cards to earn its introductory offers.

TV streaming service Netflix had admitted showing some people who sign up to Netflix higher prices to understand how much potential customers "value" it - but it says nobody will actually pay the higher price

How this site works

We think it's important you understand the strengths and limitations of the site. We're a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can't guarantee to be perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong.

This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances and remember we focus on rates not service.

We don't as a general policy investigate the solvency of companies mentioned (how likely they are to go bust), but there is a risk any company can struggle and it's rarely made public until it's too late (see the Section 75 guide for protection tips).

Do note, while we always aim to give you accurate product info at the point of publication, unfortunately price and terms of products and deals can always be changed by the provider afterwards, so double check first.

We often link to other websites, but we can't be responsible for their content.

Always remember anyone can post on the MSE forums, so it can be very different from our opinion.

MoneySavingExpert.com is part of the MoneySupermarket Group, but is entirely editorially independent. Its stance of putting consumers first is protected and enshrined in the legally-binding MSE Editorial Code.